Your questions – Loans: PMAY grant application? Now don’t switch lenders

By Chaitali Dutta

For my first pucca house in Surat, my home loan was sanctioned by Yes Bank in March 2021 at 8.75% interest. In May 2022, it is 9.78% and Yes Bank does not allow partial prepayment. My PMAY grant application ID was generated in June 2021 and reached stage 3 in February 2022. There have been no updates since then.

(1) Can I transfer my home loan to another bank after getting the grant later this year?

(2) Before getting the grant if I transfer my loan to another bank, do I need to get the grant?
—Yogesh Gupta

(1) It is clear that your application has not been rejected. You can write to [email protected], to find out the reason for the delay. You are allowed to transfer the loan to any other loan provider. However, the first bank will transfer the unused grant to your home loan. For the first bank, a real estate loan transfer is equivalent to a pre-closing of the loan.

(2) In the event that you transfer the home loan to a new lender, prior to receipt of the PMAY grant, your outstanding loan account balance will be taken over by the new lender and your EMI will be calculated based on new tenure and interest rate. Here in this case, you will not be allowed to apply for the PMAY-CLSS as the eligibility criteria would be violated.

If interest rates go up, will my existing car loan go up?
—Akurti Motani
If your car loan was taken out at a variable rate, with the increase in the repo rate, the interest rate on your car loan will also increase. You can increase the EMI (keeping the same term) rather than increasing the term (keeping the same EMI). This will ensure a lower overall interest expense.

Is it a good idea to take out a bank loan and invest in stocks that currently have lower valuations?
—Sudheer Kashyap
The interest payable on the loan can sometimes wipe out the gains from speculative investments such as equity investments. Then there will be capital gains tax payable on the stock investment. I advise you to accumulate money and then enter the stock markets in a planned way.

The author is the founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your questions to [email protected]

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